\n\tBy Greg Peel<\/p>\n
\n\tThe Dow closed down 35 points, or 0.3%, while the S&P ticked up a point to 1520 as the Nasdaq<\/span> gained 0.3%.<\/p>\n \n\tThe US broad market S&P 500 index hit a new post-GFC<\/span> intraday high early in the session last night at 1524 before topping out. Stocks pulled back thereafter, but the S&P remains only around 3% from its all-time high, while the Dow needs only 1.3%. Yesterday, the Australian ASX<\/span> 200 breached 5000 for the first time in two years, closing at 5003. It’s been a long awaited retracement<\/span>, and all we need to reach the all-time high now is another… um… 36%.<\/p>\n \n\tWe can thank Ben Bernanke for the divergence.<\/p>\n \n\tThe level of 5000 proved stiff resistance on the way up to the peak pre-GFC<\/span>, provided stiff support before being broken on the way down in 2008, and has proven an impenetrable barrier no less than five times between 2008 and yesterday. To clearly break this level to the upside would be to break out of the thick jungle and into the open field. Can we do it? Well that depends on whether we get this pullback everyone’s talking about. As one fund manager pointed out last night, those calling for a pullback are simply those who have missed out on the rally and want to get long.<\/p>\n \n\tSome stats, courtesy of Dow Jones: Since the 1920s<\/span> the US broad market has run for an average 49 days before a 5% pullback, and 161 days before a 10% pullback. In the current rally the S&P 500 has run 60 days without a 5% pullback and 342 days without a 10% pullback.<\/p>\n \n\tFor the ASX<\/span> 200 to push on from its 5000 breach today we would first have to ignore Wall Street’s session overnight, although recently that has not been beyond the realms. We would nevertheless need a repeat of yesterday’s suite of positive earnings results, and for that there are plenty of contenders. Rio Tinto ((RIO)) is one. Wesfarmers<\/span> ((WES)) is another, along with ASX<\/span> ((ASX<\/span>)), Mirvac<\/span> ((MGR<\/span>)), Downer EDI ((DOW)) and Billabong<\/span> ((BBG<\/span>)), among others.<\/p>\n \n\tThere was no particular impetus to Wall Street’s initial rise and subsequent fall last night, just as there has not been much rhyme or reason in moves over the past week or so. President Obama’s call to lift the US minimum wage from US$7.25\/hr to US$9.00\/hr in his State of Union Address has sparked a good deal of debate, particularly among economists. While it is positive to give a lot of Americans more money to spend, it is not so positive if small businesses are forced to retrench or at least not hire workers given the additional cost. Meanwhile, the 0.1% rise in January retail sales reported last night was weak but right on expectation, given the anticipated impact of the payroll tax hike.<\/p>\n \n\tIran agreed last night to return to the negotiating table with the UN Security Council with regard to its nuclear progress. The capitulation follows Obama’s harsh words on the subject yesterday, but is assumed to more realistically be as a result of the impact of imposed sanctions. Iran is now ready to install sophisticated enrichment devices at its nuclear facility but experts remain confident the capacity to produce the level of enrichment required for a warhead – thus likely prompting a pre-emptive<\/span> strike from Israel – is still some way off.<\/p>\n \n\tThere has been an Iran premium built into the price of oil for some time, albeit the oils did not post much of a response to any supposed easing of tensions last night. Brent was up US34c<\/span> to US$118.72\/\/bbl<\/span> and West Texas down US38c<\/span> to US$97.13\/bbl<\/span>. Gold fell US$9.40 to US$1641.30\/oz despite the US dollar index remaining steady at 80.09.<\/p>\n \n\tThe Aussie joined in the positive mood Downunder<\/span> yesterday in rising 0.4% to US$1.0344. Base metals were mixed overnight on smallish moves.<\/p>\n \n\tThe SPI<\/span> Overnight rose 2 points.<\/p>\n \n\tToday’s local earnings report highlights have been noted above. Today will also see the release of Japan’s December quarter GDP result and the Bank of Japan will also release a monthly policy statement. It’s a scheduled BoJ<\/span> meeting but the timing is interesting, coming, as it so happens, between yesterday’s bungled attempt by the G7<\/span> to annunciate the group’s position on currency volatility (ie<\/span>, the yen) and the G20<\/span> finance ministers meeting beginning Friday at which the Currency War is expected to be a hot topic.<\/p>\n \n\tThe eurozone<\/span> will release its December quarter GDP result tonight.<\/p>\n \n\tRudi will appear on Sky Business at noon and again at 7pm<\/span> for the Switzer Report.<\/p>\n \n\tPlease ladies – no more cards.<\/p>\n \n\t <\/p>\n \n\tAll overnight and intraday prices, average prices, currency conversions and charts for stock indices, currencies, commodities, bonds, VIX<\/span> and more available in the FNArena Cockpit. Click here<\/a>. (Subscribers can access prices in the Cockpit.)<\/em><\/p>\n \n\tAll paying members at FNArena are being reminded they can set an email alert specifically for The Overnight Report. Go to Portfolio and Alerts in the Cockpit and tick the box in front of The Overnight Report. You will receive an email alert every time a new Overnight Report has been published on the website.<\/em><\/p>\n